WASHINGTON — The Canadian government is poised to walk away from a deal with Boeing to buy 18 F/A-18E/F Super Hornet jets, a major blow for the future of the Boeing jet.

Canada’s Liberal government will announce next week plans to proceed with an interim buy of used F/A-18 Hornets from Australia, dashing Boeing’s hopes of a Super Hornet sale, three sources familiar with the situation told Reuters, according to a Dec. 5 report.

Canada intended to buy new Super Hornet aircraft to bridge the gap between its aging CF-18 Hornet fleet and a new fighter jet. However, after Boeing lodged a legal complaint accusing Canadian aerospace firm Bombardier of dumping commercial planes on the U.S. market, Canadian government officials — including Prime Minister Justin Trudeau — put a hold on the purchase and began looking at other options.

Officials from Canada’s Department of National Defence said they would not comment on the rumors. Public Services and Procurement Canada, which would handle any purchase, did not issue a comment on the report.

Boeing also declined to comment on the Reuters report.

During an exclusive interview with Defense News on Dec. 2, Leanne Caret, president and CEO of Boeing Defense and Security, referenced the company’s long history with the Royal Canadian Air Force, which flies CF-18 Hornets. However, she stopped short of saying she believed problems with Canada could be resolved.

“As with any of our customer’s decisions, we are there for the long term and in Canada we have had a proud history with them for decades. They are going to make the right decision that is right for them,” she said.

Speaking to Defense News last month, RCAF commander Lt. Gen. Michael Hood said that if the service bought used Hornets from Australia, the Canadian government would have to invest in extending the lives of the airframes, which are meeting their structural end. L3 Technologies, which has worked on the CF-18s previously, would likely pick up that contract— further shutting out Boeing.

The decision to reverse course on the Super Hornet deal could have colossal implications for Canada’s future fighter competition. When the government announced the Super Hornet interim buy in 2016, it was widely seen as a rebuke of Lockheed Martin’s F-35 and a sign that the Super Hornet was on a fast track to win Canada’s competition.

Continued tensions between Canada and Boeing shot a hole through that vision, bolstering not only the chances of Lockheed’s F-35, but also the Eurofighter Typhoon, Saab Gripen E and Dassault Rafale.

David Pugilese in Canada and Aaron Mehta in Washington contributed to this report.

As expected, Ottawa has scrapped plans for an interim purchase of 18 new Boeing F/A-18E/F Super Hornets in retaliation for the U.S. Commerce Department’s proposal to impose a 300% tariff on imports of Bombardier C Series airliners.

Instead, Canada plans to buy 18 used F/A-18A/B Hornets from Australia to top up its fleet of similar CF-18A/Bs to the level required to meet the Royal Canadian Air Force’s (RCAF) commitments to both NATO and North American Aerospace Defense Command (NORAD).

At the same time, Ottawa is officially launching an “open, competitive process” to replace its fighter fleet, but introducing a new procurement test to ensure that “any bidder responsible for harming Canada’s economic interests will be at a distinct disadvantage,” Defense Minister Harit Sajjan says.

The purchase of 88 aircraft represents an increase of more than a third over the previous plan to buy 65 new fighters to replace the CF-18s and results from a detailed analysis of the RCAF’s commitments, Sajjan says. Contract award is anticipated in 2022, leading to first deliveries in 2025.

At a Dec. 12 press conference launching the fighter competition, Canadian officials declined to be drawn in on what Boeing would have to do the pass the new “economic harm” test. Public Works Minister Carla Qualtrough says the test will be applied when bids are assessed in late 2019/early 2020, adding she hopes none of the bidders will be at a disadvantage by that time.

Boeing has so far refused to back down from its dispute over pricing and government subsidies for the C Series, despite coming under intense pressure from the governments of Canada and the UK, with wings for the airliner made by Bombardier in Northern Ireland.

The U.S. International Trade Commission (ITC) is due to decide in February whether pricing for Delta Air Lines’ April 2016 order for 75 C Series will materially harm U.S. industry, despite the fact that Boeing did not offer a competing aircraft.

If the ITC rules in Boeing’s favor, the 300% tariff will be imposed on all C Series imports into the U.S. Deliveries to Delta are due to begin in April 2018, but the U.S. airline has made clear it will not pay the tariff.

Since Boeing filed its anti-dumping petitions with Commerce and the ITC, Airbushas agreed to take a controlling stake in the C Series program, with aircraft for U.S. customers planned to be assembled at its Mobile, Alabama, plants from 2019 in a bid to avoid any tariff.

Canada already requires bidders for defense procurements to commit to placing industrial and technology benefits with Canadian companies equal to the value of the contract. Qualtrough says the economic harm test will be applied to all future procurements and is part of a more balanced and holistic approach to ensuring purchases provide benefit and avoid potential detriment to Canada.

The fighter competition will be open to all comers, but if a bidder “causes economic harm, impacts jobs or a key sector in our economy, they will be at a distinct disadvantage,” Sajjan. “We are standing up for Canada” and an $31 billion aerospace industry that employs 240,000 people, he says.

They got his name wrong, it's Harjit Sajjan. And he's quite the impressive individual. And how abut a big-ups for Canada and it's melting pot of people when a person gets appointed to arguably the top defense position based on his qualifications only? I think that is just absolutely terrific!

His father was the constable of the Punjab police in India. Immigrated to Canada in 1976 when he was 5 years old and look at him now, the Defense Minister of Canada making big-time defense decisions for the country. What a great, immigrant success story. He also has a popular nickname "Bada$$"!

The fighter competition will be open to all comers, but if a bidder “causes economic harm, impacts jobs or a key sector in our economy, they will be at a distinct disadvantage,” Sajjan. “We are standing up for Canada” and an $31 billion aerospace industry that employs 240,000 people, he says.

Canada’s Liberal government will announce next week plans to proceed with an interim buy of used F/A-18 Hornets from Australia

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That's a VERY strange and interesting decision, since buying used fighter aircraft -- although there isn't a lot wrong with doing that -- still has a counter effect that you don't get when you buy new. But if they're buying 88 of them, they must've done their homework for a relatively large number like that. But not going with the Super Hornet for the reasons they mention makes complete sense, despite the terrific Super Hornet. Good for Canada.

I think the F-35 is really the BEST aircraft for Canada. It's range and all other knows qualities make it perfect for a large country that is also part of NORAD and missions that go well into the north-east Pacific and beyond. It's almost a no-brainer.

They got his name wrong, it's Harjit Sajjan. And he's quite the impressive individual. And how abut a big-ups for Canada and it's melting pot of people when a person gets appointed to arguably the top defense position based on his qualifications only? I think that is just absolutely terrific!

His father was the constable of the Punjab police in India. Immigrated to Canada in 1976 when he was 5 years old and look at him now, the Defense Minister of Canada making big-time defense decisions for the country. What a great, immigrant success story. He also has a popular nickname "Bada$$"!

Makes total sense.

That's a VERY strange and interesting decision, since buying used fighter aircraft -- although there isn't a lot wrong with doing that -- still has a counter effect that you don't get when you buy new. But if they're buying 88 of them, they must've done their homework for a relatively large number like that. But not going with the Super Hornet for the reasons they mention makes complete sense, despite the terrific Super Hornet. Good for Canada.

I think the F-35 is really the BEST aircraft for Canada. It's range and all other knows qualities make it perfect for a large country that is also part of NORAD and missions that go well into the north-east Pacific and beyond. It's almost a no-brainer.

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They will buy some used Hornets from Australia.
The 88 fighters are in addition to the Australian Hornets.
The decision for the new fighters is delayed until 2022, when Gripen E is available ;-)